Equity Analysts: "In A Bull Market, You Don't Need Them. In A Bear Market, They'll Kill You"
: GS(14)@2012-07-07 15:52:41http://www.zerohedge.com/news/eq ... ket-theyll-kill-you
From bull market gods and goddesses of the 1980s and 1990s, stock analysts now preside over a much more modest kingdom. Nic Colas, of ConvergEx notes that the world has moved on to new golden calves, from currencies (with great leverage) to exchange traded funds (with generally less volatility) to macro analysts (the current Zeuses and Heras). This even extends to the world of the retail investor – there are far more Google searches in the U.S. for "Storage auctions" (246,000/month) than for "stock research" (just 33,000/month), and the rate of decline resembles a fast-decaying radioactive particle. Yet the rebirth of the business is already underway. Analysts now focus on developing useful proprietary datasets, exclusive expert resources, channel-checking contacts, and deeper management relationships. The public’s attention to active money management and stock picking will always be linked to overall market performance, but when the next bull market arrives those analysts who remain – and innovate - will be well-positioned to climb back to the top of the food chain.
Nic Colas, ConvergEx: Death (and Rebirth) of a Stock Analyst
Suppose for a moment that you are a money manager with just one client, whose investment more than covers your day-to-day expenses at your customary 2% management fee. The catch to this happy arrangement is that this investor wants a 10% absolute return and will pull his capital if you do not achieve it. On the plus side, he will keep the money with you for as long as you achieve this bogey. Drawdowns don’t matter; just make 10%. Oh, and the performance fee is 50% of anything over that target.
One more catch – you can only use one external resource in your investment process. Our mystery client wants you focused. Your choices are:
Unlimited access to one major broker’s sell side research and investment conferences.
Top-customer status at one expert network of your choice.
All the quantitative research resources you would like. The catch here is that you can only hire a few programmers to exploit this content.
Unlimited access to a top-tier macro research firm, with resources deep in every major central bank around the world.
In the current investment environment, the last choice is the lay-up answer. With asset price correlations near 90% for a wide range of investment choices, the on-off switch to market direction sits in Washington, Frankfurt, Beijing, and other centers of political and central bank power. The other choices would give you little insight here. Even those brokerages with excellent macro research and alumni in high places don’t seem to be able to call the twists and turns of macro policy.
That little case study is just one reason for the declining interest in single-stock research, especially in the United States. There is, of course, the range-bound equity market of the last +10 years as well. There is an old saying about analysts among the grey hairs of Wall Street: “In a bull market, you don’t need them. In a bear market, they’ll kill you.” And in a flat market, it seems, both apply. A few datapoints to highlight the decline of stock research in American capital markets:
Most surveys of institutional investors – mutual fund and hedge fund managers, mostly – find that these major clients of Wall Street firms pay their brokers for management access far more than the insights of their analysts. The most commonly surveyed percent of commissions for access to conferences and 1:1 meetings is 60%. The buy-sell-hold recommendations, written reports and visits from analysts are collectively worth more like 20% of the commission pool.
Retail investors have a similar level of ennui at the moment when it comes to equity research. If you look at Google Adwords search count data for the term “Stock Research” you’ll find that the average month only registers about 33,000 searches for the term. Thanks to several reality TV shows, the term “Storage auction” – the business of buying abandoned storage lockers to resell their contents at a profit – gets 246,000 searches per month. At the crudest level of comparison, this means the average American thinks wading through bedbug infested storage lockers is preferable to sorting out the winners and losers in their portfolios.
Google Trends data shows the rate of decline in the search for “Stock research,” and the decline since 2006 looks like some fast-decaying radioactive isotope. Interest in the term saw a 50% reduction from 2006 to 2008, and a further reduction of like amount since then. That essentially means that searches for the term now sit 75% lower than just six years ago. By contrast, the search term “ETF” is exactly where it was in 2006, which may sound like a pyrrhic victory save the tough investment environment of the last five years.
It is, however, too soon to put the stock research business in the same receptacle as buggy whips, road atlases and the yellow pages. First of all, brokerage firm analysts are the single most efficient billboards available for those companies’ thought leadership in a given sector. An analyst that “Shows well” to the firm’s investment clients and corporate customers is still a valuable franchise. How else do you think all those management meetings come to be in the first place?
Even outside the narrow confines of brokerage research, enterprising independent analysts are remaking the single stock research game along a new set of parameters. And some that aren’t so new, but have fallen into disrepair. Some examples here:
Quantitative data sets and surveys. When I first started as a stock analyst at First Boston in 1991, my mentor was a 20 year veteran named John McGinty who covered the machinery sector. Every quarter he would call all the Caterpillar dealer around the world – there were about 350 at the time, I believe – and ask how business was going. Sales trends, inventory levels, and the like. He published the findings, which were always well received since no one else did the work.
The world has moved on a bit since those surveys. Many U.S. listed companies take a dim view of analysts calling their store locations – even those that are franchised - or trying to wheedle information about of mid level executives. And the Securities & Exchange Commission looks on such leaks with an equally discouraging eye.
Against those forces of containment you have the expansive push of technology. Credit cards companies now have purchase data for hundreds of millions of consumers. The Internet makes certain business models – think online booking of airplane tickets – entirely transparent to anyone who can ping travel websites every hour and look up the average seat cost for every flight.
When you dovetail this newfangled way to collect information with an increasingly computer-based trading architecture in the U.S., the future of stock research and analysis comes into sharp focus. While quantitative investors and high frequency trading operations currently have remarkably short-duration investment holding periods, there’s really nothing in their platforms that limits them to 15-second periods of stock ownership. As more data about consumer spending and behavior goes online or into corporate data centers, that information will be sold to Wall Street. It’s already happening.
Narrow industry focus/select distribution. At ConvergEx we have a robust business promoting select research providers to institutional clients, and in this particular area the single-stock analyst is still welcomed – on their merits – into the investment workflows of hedge funds and long-only shops. Prospective clients want to see a small client list (less than 20 is ideal), a definable edge (usually in health care or technology) and a strong compliance process. Connect those three dots, and stock research is still alive and well on Wall Street. The downside: those are three hard-to-connect dots.
Novel sourcing. Imagine that you have a lead on a great investment opportunity in West Africa - a new group of highly experienced mining professionals for the region has identified a promising new diamond field. How do you tell if the managers are on the up-and-up? You hire a team of ex-CIA and British intelligence officers to check it out. In less than a week they can ping their resources in the region and given you a written report detailing everyone involved in the venture. Where they went to school, any history of corruption, the whole ball of wax. This won’t assure success, of course, but it does limit the possibility of fraud.
In short, stock research will make a comeback, and that return journey will likely come from two directions. The first will be technological. Any product that can systematically deliver quantitative business information in real-time to the increasing legions of automated trading systems and algorithmic investors will grow. The second path is more cyclical in nature. I can’t but think old-school stock research, with sector analysts, is ultimately tied to the fortunes of the equity market. When those recover, interest in stock picking will as well. And for analysts and stock market investors, that inflection point cannot come too soon.
: GS(14)@2012-07-07 15:52:59http://lckwcm.blogspot.hk/2012/07/blog-post_9190.html
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7月4日，週三。美國國慶休市，萬眾期待的6月份就業報告週五發表。 4、5兩月非農業職位增長遠遜預期，數字公佈後美股即散，惟這次情況可能有別。老畢並非對美國勞工市場改善抱有期望，而是今時今日股市升跌全看央行行止，除非數字好到市場相信經濟可自行複元穩步復甦，否則投資者寧可數據壞透，也不樂見似好非好似壞非壞的報告。 數據唔怕爛 數據愈爛股市愈彈，雖是有乖常理的「邏輯」，但只須看看中美兩國公佈最新製造業數字後的市場反應，便知經濟愈弊央行愈有機會救市這種市場預期，足以令本應大跌的股市變為大升。中國6月份官方PMI跌至七個月低位，險守50水平（50.2），恆指不跌反升；美國ISM指數上月跌穿50（49.7），非但反映製造業陷入衰退，當中兩項重要元素更出現雙位數跌幅（新訂單下降12.3％，貨品價格急挫10.5％），意味需求不振之餘，通縮踪影亦若隱若現。然而，與港股一樣，美股在數字公佈後不跌反漲。 宏觀當道專家難做 市場對中美數據差勁報以「掌聲」，背後包含著投資者對人民銀行最快本月下調存款準備金率、歐洲央行減息以至聯儲局推出延續扭曲操作（OT）以外寬鬆措施的期盼，惟美國加入環球「放水」行動，數據爛透乃必不可少的條件。在這種市場「邏輯」驅使下，週五公佈的美國6月份職位增長倘再次遠遜預期，股市不跌反升甚至大幅上揚，我不會感到意外。 講開央行，紐約梅倫銀行旗下資產管理分支ConvergEx「思想家」Nicholas Colas做了一個實驗，不妨照板煮碗跟讀者玩玩。 假設閣下是一位基金經理，客戶只有一人，但按行規一年徵收資產值2％管理費，租金人工燈油火蠟樣樣搞掂，應付日常開支綽綽有餘，七除八扣後還有錢落袋有肉可食。然而，這位尊貴客戶有一苛刻要求：必須交出年賺一成的絕對回報，否則講多無謂馬上撤資。不過，在決絕的背面，閣下若能替此君年復年地至少賺10％，他非但不會舍你而去，還心甘情願按五五之比跟閣下分享目標以外的任何利潤。如此安排，夠公平了吧？ 且慢。尚有一附帶條件：為免閣下貪多務得不夠專心，在以下四項研究資源中，你只能選擇一項，舉手不回，必須慎重考慮。 ①無限量獲得一家主要投行的研究報告，大小投資會議亦必為閣下預留一席。 ②接通閣下的「心水」專家網絡，一個電話一通電郵，有問必答言無不盡。 ③量化研究（quantitative research）所需資源應有盡有。 ④隨時與一家在全球主要央行廣佈線眼的宏觀研究機構深入溝通，對方知無不言。 四個選擇表過，作為基金經理，你揀哪個？ Nicholas Colas的實驗對象，幾乎清一色選擇④。 《信報》讀者的答案，老畢相信亦一般無異。今時今日，莫說同一類型資產，即使看似互不相干的市場，相關性高達八九成亦絕不稀奇。在資產價格同上同落的世界，頂尖投行、一流專家以至各行各業包羅萬有的數據寶庫，對市場方向的拿捏皆不可靠；真正決定市場何時risk on何時risk off的，只有貝南奇、周小川、德拉吉、金默文等中央銀行香主舵主。在上述四個選擇中，①、②、③皆不能為基金經理帶來任何優勢，只有④才能助你運籌帷幄，決胜千裡。 Ray Dalio在金融海嘯後紅到發紫，不是沒有原因的。 散戶對個股心淡 Colas實驗針對的雖是對沖基金、互惠基金等機構投資者，惟在資產價格高度相關的今天，散戶對個股的興趣也大不如前。 Google Trends數據顯示，以stock research作搜尋關鍵詞的案例，2006至08年減少五成，08年至今再降五成。換句話說，與2006年即六年前比較，今天散戶對個股相關信息的興趣（以搜尋案例為基礎）劇降75％！ 當然，這只是一種籠統粗略的參考，未必十分準確。再說，相關案例僅反映美國散戶對股票的興趣，從本港財經台「講股」節目俯拾皆是可見，香江散戶「炒股唔炒市」者大有人在（賺蝕乃另一回事），港美兩地不一定可以相提並論。 然而，縱使以個股為例，閣下認為決定股價表現的是企業以至板塊基本因素，還是在risk on／risk off操控鍵上有啟動權的央行決策者？以中煤能源（1898）【圖】和中國神華（1088）兩隻煤（黴？）股為例，過去五個交易日俱升逾一成，但這是行業前景改善，抑或市場憧憬環球央行快有「放水」行動，板塊／個股跌得愈殘彈得愈勁有以致之？ 華爾街有句老話：牛市用不著他們，熊市給他們害死（In a bull market, you don't need them. In a bear market, they'll kill you.）。這種「地球生物」，大家猜猜是什麼？溫馨提示：他們之中的星級人馬已登上更高台階，向政府推銷治港理念。